Mayor Justin Bibb said this week that he did not anticipate the size of the Cleveland Metropolitan School District’s looming $168 million budget cliff until he brought on a new schools CEO last year. 

But school leadership received an earlier warning. 

The district’s own five-year financial forecasts show that school officials were aware of the coming money crunch at least as far back as November 2022, eight months before CEO Warren Morgan took over from outgoing leader Eric Gordon.

“We did not foresee the scale or magnitude until Dr. Morgan got on board,” Bibb said. “Now we did project or foresee a one-year deficit. But as we did a further analysis of the budget and the books, we uncovered a lot more than we expected.”

Bibb made the comments while presenting his city budget proposal to Cleveland City Council on Tuesday. Council members pressed him to explain what he knew about CMSD’s looming deficit caused by the expiration of federal pandemic relief dollars. 

Signal Cleveland asked the mayor’s office Wednesday morning for more context on Bibb’s remarks. On Thursday afternoon, Press Secretary Marie Zickefoose replied that the 2022 financial forecast “was shared with the mayor’s office.”

“At that time the possibility of considering a levy in 2025 or 2026 was raised, but this was not a substantive discussion,” she continued. “Given the timeframe, the decision was made to first address the CMSD leadership change and then dig deep on the budget so that financial decisions would be made and aligned with the next leader’s strategy and vision.”

Although CMSD has a separate budget not overseen by council, the district falls under the mayor’s control. As mayor, Bibb selects school board members, while the CEO handles day-to-day operations. Bibb meets with the CEO and employs a cabinet-level chief who serves as the mayor’s liaison with the district. 

At the council meeting, Anthony Hairston of Ward 10 said he had a hard time swallowing the idea that CMSD’s finances didn’t come up in Bibb’s meetings with Gordon. 

“It’s hard for me to accept that with the quarterly meetings, the monthly meetings over the last couple of years, we have not been able to catch some of, or forecast some of the issues that we are seeing within the school district,” he said.

The district now faces a projected negative cash balance of $168 million by the end of June 2026 unless it makes cuts to programs funded by expiring federal pandemic relief. Last week, Morgan outlined cuts to the central office and out-of-school programs to lessen the coming financial hit. 

In a November 2022 meeting, the school board reviewed a financial forecast that projected large deficits on the horizon. At the meeting, Gordon broached the topic of putting a levy before voters in the coming years. 

CMSD spent pandemic federal aid on wireless devices for students and an array of out-of-school programs, among other items. With that money running out, the district now must decide which expenses to continue – a problem, Bibb pointed out, that districts around the country are now facing.

“There was never a plan on how to pay for those things on a go-forward basis,” the mayor told council on Tuesday. “And so now we have to make some hard choices to ensure that we have a long-term financial sustainability pathway for the district.” 

Morgan was announced as CMSD’s new CEO in May of 2023. He officially started the job in late July. On Nov. 29 last year, the state formally flagged CMSD for its impending deficits and required the district to draw up a plan to close the budget hole. 

Red ink in CMSD’s 2022 financial forecasts

CMSD submits five-year financial forecasts to the Ohio Department of Education and Workforce twice each fiscal year, in November and May. The first forecast of Bibb’s mayoralty, in May 2022, showed a budget deficit beginning to open in 2024, with a negative unencumbered cash balance of $15.8 million projected in 2026.

The November 2022 forecast projected a negative unencumbered cash balance of $157 million by 2026 owing to the expiration of federal funding. That negative balance is now forecast to be $168 million.

At a board meeting that November, Gordon said the district “can and will” eliminate the near-term deficits in 2024 and 2025. 

But he floated the idea of placing a levy on the ballot in future years. He said he and the district interim finance chief would sketch out the costs of continuing to pay for certain programs then covered by federal dollars.

“We have known that 25-26 would be the year that we would have to be considering the potential of new money,” Gordon, who had already announced his resignation as CEO, told the board. He added: “The board and community may have to consider a levy in the 25-26 school year.” 

Immediately after he took office as mayor in 2022, Bibb held weekly meetings with Gordon. Those check-ins later became monthly. 

Bibb’s public schedules show that he and then-Chief of Education Holly Trifiro met with Gordon on Nov. 10 and Dec. 5 in 2022, around the time that Gordon was presenting CMSD’s financial forecast to the board. 

Morgan and Bibb talked about CMSD budget cuts, mayor says

Bibb told council on Tuesday that Morgan discussed the programming cuts with him before deciding to propose them. The new CEO also kept him in the loop on the decision to use the remainder of the $20 million MacKenzie Scott gift to help with program costs, the mayor said. 

“Dr. Morgan, as soon as he assumed the helm of CMSD, really uncovered that they were going to be facing a lot of fiscal challenges,” Bibb said. 

During the pandemic, CMSD began newly paying for after-school programs using temporary federal assistance, the mayor told council. With that money now largely gone, there’s not a long-term source of continued funding. Now Morgan is trying to preserve funding for students, teachers and classrooms, Bibb said.

“What happened was you had a whole lot of new after-school programs get funded as a result of the pandemic,” Bibb said. “So those programs may go away, but our traditional after school programs like band and sports are not going away. So that’s important to note.” 

Council members were displeased with the developments. 

“Who’s getting fired for doing this to our kids?” Ward 5 Council Member Richard Starr asked. 

Ward 9 Council Member Kevin Conwell, who represents the Glenville neighborhood, told Bibb that his residents weren’t happy with CMSD’s budget decisions. He suggested the mayor should have kept quarterly tabs on CMSD’s finances. 

“Someone should have been monitoring and controlling that, Mr. Mayor,” Conwell said, adding, “You wait until someone leaves, and then we take money from the children? That’s unacceptable.” 

Hairston criticized the decision to redirect the MacKenzie Scott gift. Bibb replied that the Scott grant “warrants a separate conversation.” Morgan is expected to brief council in the near future on the district’s budget. 

“There is a lot more in terms of that MacKenzie Scott gift that council’s not aware of,” Bibb said. “But I want to hold that for a separate conversation. That’s not appropriate for this body at this time.” 

This story has been updated with comment from the mayor’s office Thursday afternoon, Feb. 22.